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Share-Based Compensation
 9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
Equity Plans
The Company grants awards to recipients through the 2017 Equity Incentive Plan, as amended (the “2017 Plan”), which was approved by stockholders and the Board of Directors. In June 2023, stockholders approved an amendment to the Company’s 2017 Equity Incentive Plan to increase the number of shares available for issuance by 3.65 million shares of common stock. Pursuant to the latest amendment, the 2017 Plan provides for the issuance of shares that total no more than the sum of (i) 18,150,000 new shares, (ii) any returning shares such as forfeited, cancelled, or expired shares granted under either the 2017 Plan or the Second Amended and Restated 2007 Equity Incentive Plan and (iii) 500,000 shares pursuant to an inducement award. The number of shares available to be issued under the 2017 Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) 1.5 shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award). As of September 30, 2023, there were approximately 5.7 million remaining shares available for issuance under the 2017 Plan. Options expire 10 years from the date of grant.
The Company uses the Black-Scholes option-pricing model to recognize the value of stock-based compensation expense for stock option awards that are not market based. Determining the appropriate fair-value model and calculating the fair value of stock option awards at the grant date requires judgment, including estimating stock price volatility and expected option life. The fair-value of the restricted stock unit awards at the grant date is based on the market price on the grant date. The Company develops estimates based on historical data and market information, which can change significantly over time, and adjusts for forfeitures as they occur.
General Vesting Conditions
The Company’s stock options and restricted stock unit (RSU) awards are generally subject to a one-year cliff vesting period after which 1/3rd of the shares vest with the remaining shares vesting ratably each month over a two-year period subject to the applicable grantee’s continued service. Beginning in the second quarter of 2022, RSU awards are generally subject to a three-year vesting period with 1/3rd vesting per year on the anniversary of the grant date. Certain stock option awards are market or performance based and vest based on certain triggering events established by the Compensation Committee. Certain executive stock option and RSU awards provide for accelerated vesting if there is a change in control or termination without cause.
Stock Options
The Company used the following weighted average assumptions for options granted during the nine months ended September 30, 2023:
Weighted Average: Nine Months Ended September 30, 2023
Expected term6.2 years
Expected volatility75.4 %
Risk-free rate3.6 %
Expected dividends— %

Service Period Based Stock Options
The following table summarizes activity of service period-based stock options during the nine months ended September 30, 2023:
Weighted Average
(In thousands except per share data and remaining contractual term)Number of
Options		Exercise
Price		Remaining
Contractual
Term (Years)		Aggregate
Intrinsic
Value
Outstanding at December 31, 20229,397 $4.21 6.2$44 
Options Granted2,650 1.79 
Options Exercised— — — 
Options Forfeited(1,171)3.98 
Outstanding at September 30, 202310,876 $3.64 6.1$3 *
Exercisable at September 30, 20237,507 $4.32 4.6$1 *
*The aggregate intrinsic values in the table above are based on the Company’s stock price of $1.46, which is the closing price of the Company’s stock on the last day of business for the period ended September 30, 2023.

There were no activities related to performance or market-based stock options during the nine months ended September 30, 2023.

Restricted Stock Units
The following table summarizes activity of RSUs during the nine months ended September 30, 2023:
(In thousands except per share fair value)Number of RSUsWeighted Average
Fair Value
Unvested shares at December 31, 2022650 $2.77 
Granted429 1.81 
Vested(327)2.83 
Forfeited(75)2.35 
Unvested shares at September 30, 2023677 $2.18 
Expected to vest at September 30, 2023677 $2.18 
Restricted Stock Awards
The following table summarizes activity of restricted stock awards during the periods indicated:
(In thousands except per share fair value)Number of AwardsWeighted Average Fair Value
Unvested shares at December 31, 2022183 $3.25 
Granted— — 
Vested(16)$4.23 
Forfeited— — 
Unvested shares at September 30, 2023167 $3.15 
Expected to vest as of September 30, 2023167 $3.15 
Total Share-Based Compensation
Total share-based compensation expense was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2023202220232022
Share-based compensation expense
Cost of sales$87 $73 $253 $203 
Sales and marketing180 414 879 1,134 
Research and development247 252 746 730 
General and administrative603 490 1,836 2,346 
Total$1,117 $1,229 $3,714 $4,413 
In future periods, the Company expects to recognize approximately $4.3 million and $1.2 million in share-based compensation expense for unvested options and unvested RSUs, respectively, that were outstanding as of September 30, 2023. Future share-based compensation expense will be recognized over 1.5 and 1.7 weighted average years for unvested options and RSUs, respectively. The Company also has total unrecognized share-based compensation expense of $1.0 million pertaining to the Joint Venture. Such expense will only be recognized if Blue Hat Registration is achieved, the timing of which is uncertain as of September 30, 2023. For additional discussion of the Joint Venture, see Note 12, Joint Venture Agreement.